Tyre Giant JK Tyre posted significant profits through increasing radicalization of tyres in buses and trucks
Indian tyre industry major, JK Tyre & Industries Limited (JKTIL) recently announced its results for Financial Year 2019 where it posted sales at Rs.10,370 crore. The surge in sales, backed by growing demand, grew by 24% while Operating Profit for the year at Rs.1,196 crore was 35% higher. Q4 sales at Rs. 2,706 Crores also grew by 18 % over the corresponding period.
Commenting upon the results, Dr. Raghupati Singhania, Chairman and Managing Director of the Company said, “FY19 was indeed a landmark year for the Company. JK Tyre sales crossed the Rs.10,000 crore-mark while achieving a robust growth of 24% over the previous year, surpassing the industry growth. Despite Q4 profitability being impacted due to high raw material prices, the operating margins for the year as a whole increased by 35%.”
JK Tyre sales volume grew by 20% despite a slowdown in the automotive sector in the second half of the year – courtesy of limited demands and vehicle sales. JK Tyre could further enhance its market presence and output across different tyre categories, led by the high capacity utilization of Cavendish, the recently acquired subsidiary of the company.
Dr. Singhania added: “The company continues to maintain its leadership position in India’s Truck/Bus Radial tyres segment. Capacity expansion of Truck/Bus Radials undertaken at Cavendish will help the company further bolster its position in this segment.” The comment is backed by the increasing sales and the newer 2-wheeler segment launched by JK Tyre – which grew by over 40%, further bolstering tyre sales for the company.
The company value surge could also be attributed to the recent preferential allotment of Equity Shares to the Promoter Group for an amount aggregating Rs. 200 crores, which added to its Net Worth.
The Indian tyre industry represents the fourth largest market for tyres in the world after China, Europe and the United States. Currently, the market is currently being driven by increasing radicalization of tyres especially in buses and trucks – the replacement segment, even though the market for newer vehicles shrank in the corresponding financial year.